Want A More Robust Supply Chain? Build More Warehouses, Fast
When the coronavirus crisis hit the U.S., it did not take long before the shortfalls in the supply chain infrastructure were exposed. In the early stages of the pandemic, the country was not equipped with a sufficient stockpile of masks, medical supplies, ventilators and other essential medical equipment. In addition, there was a lack of infrastructure to quickly manufacture and distribute the quantity of supplies and equipment needed to meet the demand.
Consequently, calls are growing to build a more robust system for manufacturing, storing and distributing not just vital medical supplies, but also household goods like toilet paper and disinfectants that disappeared for weeks on end from store shelves.
“‘Inventory’ used to be a bad word in the logistics business, but we have to think about the future differently,” said Greg Gordon, the president of Gordon Highlander, a Dallas-based general contractor that specializes in industrial construction. “It’s a huge demand driver. Even a 3% increase in inventory could mean 800M SF in new industrial development.”
The steady growth of e-commerce, fueled by the growing consumer demand for convenience, has only been further propelled recently by social distancing restrictions brought on by the pandemic. The rapid delivery of goods ordered online is highly dependent on “last-mile” logistics and requires multiple smaller distribution centers in urban areas.
The biggest challenge in adding redundancy to national supply chains will be speed to market. The timeline to develop and deliver a modern distribution center, from initial concept and land acquisition to design and permitting to construction completion, can be five to seven years.
Speeding up this timeline will take cooperation between developers, investors, and local and federal authorities. It will also require the help of experienced general contractors who understand the intricacies and nuances of local markets. Gordon said that more and more, industrial projects are built to suit and less speculative — and working with a contractor that has experience with progressive and sophisticated tenants in the manufacturing, distribution and storage sectors will expedite the process.
“While the most important factor is speed, flexibility and accuracy are essential, making sure that the modern clients know exactly what they’re getting,” Gordon said. “That is the only way to get this accomplished.”
Another obstacle in the warehouse design process is the traditional handoff from architect to engineer to contractor. To overcome the delay created by transferring responsibility and plans between different stakeholders, Gordon said, Gordon Highlander takes a design-build approach and incorporates engineering for mechanical, electrical and plumbing systems in its delivery model. This turnkey approach can compress project delivery timelines significantly.
When it comes to meeting the challenge to expand the American supply chains, size and experience matter. Gordon said the fact he employs 75 professionals that specialize in industrial construction gives his firm the ability to react and mobilize quickly, creating an advantage over those with smaller teams.
“A lot of firms will manage tenant improvements in an industrial asset the same way as an office asset,” Gordon said. “When you’re trying to work quickly, though, it’s important to have a lot of horsepower.”
Even more important, Gordon said, is understanding local market dynamics. Contractors with market history and familiarity can add immense value to developers by leveraging relationships with local subcontractors and permitting authorities and by providing in-depth market knowledge that leads to better site selection and quicker development.
Gordon said there is no place he would rather be a contractor with industrial expertise than Dallas. The city’s pro-business climate and central location, combined with its land availability and a high-caliber development community, are enough to convince him that Dallas will be a leader as the U.S. works to build up its supply chain.
As the economy recovers from the current crisis, Gordon believes industrial will be a bright spot in many markets across the U.S., but especially in North Texas.
“Dallas supports industrial growth, and we’re ready for that next phase here,” Gordon said. “There may be a level of uncertainty around the future of retail and office space, but industrial is the home run story here in Dallas.”
This feature was produced in collaboration between the Bisnow Branded Content Studio and Gordon Highlander. Bisnow news staff was not involved in the production of this content.